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There's another thing to consider as well: The costs involved with downsizing. There are substantial expenses involved in selling your house and buying a new one; paying a real estate agent a 6 percent commission is a big chunk of change. Moving companies are expensive. Utilities sometimes charge you for opening or closing an account. If you are going to pay thousands in real estate and closing costs plus more thousands to a moving company to lug your belongings somewhere new, how long will it take you to recoup those expenses if you are only saving $350 off your monthly housing note?
The article also says many people don’t invest the gains from the sale but spend on home improvement instead, or fancy cars
Have you regretted downsizing to a smaller space, a different city? Was it worth it financially? Emotionally?
Unless you moved closer to family, kids, are you happy with your decision?
Bottomline:
Bottom line: If your downsizing savings don't amount to very much, it doesn't make much sense to leave a home you love for a new one. Other ways to get cash out of your house might be to rent out a room to someone or to list all or part of it on a peer-to-peer vacation rental service.
I think the main benefits to downsizing would be to move to a smaller, low maintenance home in a retiree friendly location.
The home we currently own was bought when we had two children in school, I was a stay at home mom and my husband was commuting to/from work every day. It's a spacious home on a big lot in a relatively new neighborhood with lots of families, not too many retirees. We've done our own yard work (mowing, trimming shrubs, pulling weeds, mulching, etc) and also our own housework. Everything is a bit of drive from our far flung neighborhood.
Flash forward to today, one of our kids has graduated from college, the other is in college, I work PT outside of the home and my husband now works from home. Retirement is on the horizon. Our needs are changing and in order to have the most worry free/stress free retirement possible we are going to need to downsize and move closer to stores/medical/conveniences.
I'd rather deal with the logistics of downsizing now while we're still reasonably fit and cognitively sharp than wait until one or both of us has medical issues.
This house is our first. 2/1, 750sf "starter home".
About as downsized as you can get.
It may be true that the costs of trading homes may seem drastic.
But there ARE other things that need to be considered.
Got a 2 or 3 story home and hip or knee trouble? Downsizing to a one level ranch might be required, regardless of costs.
Ranches are typically smaller than a 2story, unless one goes for a sprawling ranch.
What about wanting/needing to move to a different neighborhood, city or even state? A convenient time to downsize.
What about taking care of a big two story? Or big ranch? As people age, vacuuming/swiffering 3k SF can take longer, gets harder. And a roof replacement on 3k SF is going to cost than 1sf.
Empty nesters: maybe with no one around, they don't want empty kids bedrooms to remind them the kids are gone.
Tired of the same old house? Additions, updates, remodeling? Why not look for a smaller house with the features they'd like to have?
Big old house built in 1800-something? Drafty windows and historical society rules and regs?
High cost of HVAC systems? Old boilers, piping, steam radiators?$$$ wantAC? While new separate system. $$$ likely uninsulated, that can be expensive. Might be cheaper to pay the higher cost of heating and cooling if applicable than to tighten it up.
Hmm, that thing about heating/ac costs? Bigger house might mean a $500/m at current rates, smaller home, $150/m utilities bill is enticing.
How about too many memories, or bad memories in current house? Maybe time to move on.
Maybe the yard work, snow removal etc is too much. Downsizing that work makes it easier.
Maybe tired of home ownership? And the expenses, maybe a small apartment or condo better, especially if the work is done for you.
Or moving to a senior housing unit? Buy or rent where one might age gracefully and get assistance as it's needed as they age.
How about moving beat kids/grandkids?
How about a different climate? Perfect time to downsize.
There are just as many reasons, if not way too many more as there are houses being bought/sold.
Every home sold had a reason by the owners for selling.
When I was married we downsized to a 1400 sq ft ranch with a low maintenance yard. After the divorce I moved again to a 855 sq ft condo. I was glad both times. I love where I live and have no desire to move to a lower COL. 2 of my kids are here as well as many good friends.
I think the main benefits to downsizing would be to move to a smaller, low maintenance home in a retiree friendly location.
The home we currently own was bought when we had two children in school, I was a stay at home mom and my husband was commuting to/from work every day. It's a spacious home on a big lot in a relatively new neighborhood with lots of families, not too many retirees. We've done our own yard work (mowing, trimming shrubs, pulling weeds, mulching, etc) and also our own housework. Everything is a bit of drive from our far flung neighborhood.
Flash forward to today, one of our kids has graduated from college, the other is in college, I work PT outside of the home and my husband now works from home. Retirement is on the horizon. Our needs are changing and in order to have the most worry free/stress free retirement possible we are going to need to downsize and move closer to stores/medical/conveniences.
I'd rather deal with the logistics of downsizing now while we're still reasonably fit and cognitively sharp than wait until one or both of us has medical issues.
As I've said in another thread, we're doing the same. This house is way too big for us. It doesn't make financial sense. We have 1 bedroom that doesn't get used and 2 that only get used a few days a week. My son is practically living with his GF, my grandson stays the weekends. Formal living and dining that are not used.
My back is trashed, can't keep walking up and down, need a rancher again.
The article seems to only take into account money, mostly how much you'll spend giving the realtor and actually moving. There are many more reasons to downsize or not.
It doesn't make sense for one person to live in a big house, paid off or not.
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Many people do still love their homes and won't move for anything - my parents are an example while I can't wait to move.
A previous poster hit all the reasons why.
I'm sick of the snow and yard maintenance is taking it's toll on me.
These knees have a hard time doing stairs at 64 - imagine what doing stairs at 80 will be like.
My taxes are $4000 where as the state taxes where we are moving run about $600
Home improvements done 20-30 yrs ago are going to need to be done again.
This article is stupid. Sorry but that's the first thing I thought.
"Downsizing" is just one reason people move. And there are multiple reasons for the "downsizing."
Anytime someone moves or sells a house there are costs. Some more avoidable or optional than others. For example most people pay a RE commission. So let's say that might be a given. BUT surveys show people also spending money on new furniture, making possible changes to the new place -- even if just new rug, carpet or curtains. Those kinds of costs a person may not incur. But if so, they still need to be factored in.
And I would dare say that most people who "downsize" have moved at least once in their lives, so they know that. Duh. Why do you think so many people have read -- or you may have seen -- that experts say don't even buy a house unless you plan to stay at least 3 years.? (Decades ago -- before appreciation and housing markets went crazy -- I saw articles saying as many as 7 years.) Because, there are costs involved with moving, and for it to be worth it financially you need time to recoup those costs.
So wouldn't you think they'd already know to consider the pros/cons and whether it's worth it? For most people downsizing it's not their first moving or relocation rodeo.
So many "articles" today are not news. They're just "written material" to have something to put on a Website or fill space for a blog, rehashed as being news. Really, was there anything in this article that wasn't common sense or a factor not likely considered before making the final decision to move in the first place -- or downsize.
The article also says many people don’t invest the gains from the sale but spend on home improvement instead, or fancy cars
Have you regretted downsizing to a smaller space, a different city? Was it worth it financially? Emotionally?
Unless you moved closer to family, kids, are you happy with your decision?
Bottomline:
Bottom line: If your downsizing savings don't amount to very much, it doesn't make much sense to leave a home you love for a new one. Other ways to get cash out of your house might be to rent out a room to someone or to list all or part of it on a peer-to-peer vacation rental service.
We are living in a house too big for us. It will stay that way because we have an elderly parent living with us. The house is paid for, so the only costs are maintenance. It will though, become too much eventually, and we will have to downsize. When we do, I am sure it will be a low to no maintenance situation. We would consider renting as well as condo ownership.
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